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Friday, November 17, 2006
 PlayStation 3: Supercomputer Performance at PC Pricing
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Message Text: iSuppli's dissection claims that the PlayStation 3 is an engineering masterpiece that sets a new high mark for computing price/performance?even when considering it is more expensive than the Xbox 360 from Microsoft.

"With the PlayStation 3, you are getting the performance of a supercomputer at the price of an entry-level PC," said Andrew Rassweiler, teardown services manager and senior analyst for iSuppli.

Table 1 below presents iSuppli's estimate of major component and subsystem cost drivers for the PlayStation 3.

Table 1: Preliminary Estimate of Sony Playstation 3 Video Game Console Key Component and Subsystem Costs (US Dollars)
Description Manufacturer 20 Gbyte Model Cost 60 Gbyte Model Cost
Reality Synthesizer Nvidia (Sony)
$129.00
$129.00
IBM Cell Broadband Engine IBM (Sony)
$89.00
$89.00
I/O Bridge Controller Toshiba (Sony)
$59.00
$59.00
Emotion Engine and Graphics Synthesizer Toshiba (Sony)
$27.00
$27.00
Noteworthy Memory - XDR DRAM (4 x 512Mbit) Samsung
$48.00
$48.00
Other Components and Manufacturing N/A
$148.00
$148.00
Bluetooth Module Sony, Featuring CSR BlueCore 4
$4.10
$4.10
Optional 802.11 b/g Module Marvell Chipset
N/A
$5.00
Other Components and Manufacturing N/A
$2.50
$2.50
Memory Card Board N/A
N/A
$5.00
Blu-Ray Optical Drive Sony
$125.00
$125.00
SATA Hard Drive Seagate
$43.00
$54.00
Power Supply Sony (Private-Label)
$37.50
$37.50
Cooling / Mounting Cage for Motherboard N/A
$22.00
$22.00
Enclosure / Hardware N/A
$31.00
$33.00
Miscellaenous Other Assemblies N/A
$1.75
$1.75
Manufacturing Costs N/A
$39.00
$40.00
Preliminary Total Cost Estimate
$805.85
$840.35
Suggested Retail Pricing (US)
$499.00
599.00
Difference Between Cost and Retail Price
$306.85
$241.35
Source - iSuppli Corporation November 2006


PlayStation 3 costs

The combined materials and manufacturing cost of the PlayStation 3 is $805.85 for the model equipped with a 20Gbyte Hard Disk Drive (HDD), and $840.35 for the 60Gbyte HDD version, according to iSuppli?s Teardown Analysis service's preliminary estimate of expenses in the fourth quarter. This total doesn?t include additional costs for elements including the controller, cables and packaging.

At these costs, Sony is taking a considerable loss on each PlayStation 3 sold. Materials and manufacturing costs for the 20Gbyte model exceed the suggested retail price of $499 by a total of $306.85, iSuppli's Teardown Analysis service estimates. For the 60Gbyte version, costs exceed the $599 price by $241.35.

With Sony taking a smaller loss on the higher-end model, it?s not a surprise the company is steering customers to the 60Gbyte version.

In contrast, the HDD-equipped Xbox 360 has a manufacturing and materials total of $323.30, based on an updated estimate using costs in the fourth quarter of 2006. This total is $75.70 less than the $399 suggested retail price of the Xbox 360.

Table 2 below presents a comparison of costs between the PlayStation 3 models and the Xbox 360.

It?s common for video-game console makers to lose money on hardware, and make up for the loss via video game-title sales. Still, the size of Sony's loss per unit is remarkable, even for the video-game console business.

Table 2: Comparison Between Preliminary Cost Estimate of Sony Playstation 3 and Final Cost Estimate of Microsoft Xboz 360 (US Dollars)
Description

Playstation 3 20Gbyte

Playstation 3 60Gbyte Xbox 360 20Gbyte
Motherboard $500.00
$500.00
$204.00
Wireless Board $6.60
$22.10
$4.75
Memory Card Board N/A
$5.00
N/A
Optical Drive $125.00
$125.00
$19.45
Hard Disk Drive $43.00
$54.00
$43.00
Power Supply $37.50
$37.50
$25.50
Cooling / Mounting Cage for Motherboard $22.00
$22.00
N/A
Enclosure / Hardware $31.00
$33.00
$20.50
Miscellaenous Other Assemblies $1.75
$1.75
N/A
Manufacturing Costs $39.00
$40.00
$6.10
Total Console Cost Estimate $805.85
$805.85
$323.30
Suggested Retail Pricing (US) $499.00
$599.00
$399.00
Difference Between Cost and Retail Price $306.85
$241.35
$75.70
Source - iSuppli Corporation November 2006


Cutting-edge design

Despite this, iSuppli?s Teardown Analysis shows that with the PlayStation 3, Sony has delivered an amazing level of performance for the cost.

"The reason why the PlayStation 3 is so costly to produce is because it has incredible processing power," Rassweiler said. "If someone had shown me the PlayStation 3 motherboard from afar without telling me what it was, I would have assumed it was for a network switch or an enterprise server."

Some of the more advanced features of the PlayStation 3's design include:

- The dual Graphics Processing Units (GPUs), i.e. the RSX Reality Synthesizer from Nvidia Corp. and the Emotion Engine & Graphics Synthesizer from Toshiba Corp. The RSX Reality Synthesizer delivers cutting-edge high-definition graphics - while the Emotion Engine provides backward compatibility with PlayStation 2 game titles. With their design wins, Nvidia and Toshiba control 12 percent and 11 percent of the total PlayStation 3 materials and manufacturing costs respectively.

- The Cell Broadband Engine from IBM, which serves as the central processing unit of the PlayStation 3, provides the equivalent computing power of eight individual microprocessors. The Cell is what endows the PlayStation 3 with its supercomputer-like power, Rassweiler observed. IBM's Cell processor accounts for 11 percent of the PlayStation 3 costs.

- The use of four Samsung Electronics Co. Ltd. 512Mbit DRAMs that employ high-speed memory interface technology from Rambus Inc. This marks the first use of the advanced XDR DRAM technology that iSuppli has detected. Samsung's memory represents 11 percent of PlayStation 3 costs. Samsung and Elpida Memory Inc. are dual sources for the XDR DRAM.

"To give an example of how cutting-edge the design is, in the entire history of the iSuppli Teardown Analysis team, we have seen only three semiconductors with 1,200 or more pins. The PlayStation 3 has three such semiconductors all by itself," Rassweiler noted. "There is nothing cheap about the PlayStation 3 design. This is not an adapted PC design. Even beyond the major chips in the PlayStation 3, the other components seem to also be expensive and somewhat exotic."

Rassweiler cited the PlayStation 3's inclusion of a power supply that packs a whopping 400-watts - yet uses a very compact, low-profile design. At $37.50, this power supply costs about twice as much as an average unit found in a PC.

Other component winners

While many of the major components found in the PlayStation 3 were already known, iSuppli's Teardown Analysis team reported some surprise part selections in the game console that could boost the fortunes of their suppliers. These include:

- International Rectifier Corp., which contributes several power-management devices to the PlayStation 3. This gives International Rectifier a 3 percent share of total PlayStation 3 materials and manufacturing costs.

- Marvell Technology Group Ltd.?s 802.11 b/g module chipset, which provides wireless local area networking capabilities. With this design win, Marvell owns 2 percent of the PlayStation 3's costs. CSR plc's BlueCore 4 solution, which supports version 2.0 of the Bluetooth wireless standard, plus Enhanced Data Rate technology, giving it a transfer speed three times faster than current Bluetooth devices, according to CSR. This gives CSR a 1 percent share of the PlayStation 3 cost.

- Spansion Inc, which contributed an 8Mbit NOR flash memory chip for the PlayStation 3?s Bluetooth module, and a 16Mbit NOR flash part for the console?s Blu-Ray module. This gives Spansion ownership of less than 1 percent of the PlayStation 3?s costs.

A component glitch

Sony has suffered some well-publicized problems meeting its PlayStation 3 production and delivery goals.

Production problems meant that only 100,000 PlayStation 3 machines were ready in time for the console's debut in Japan on Nov. 11, according to Chris Crotty, senior analyst, consumer electronics for iSuppli. When it goes on sale in the United States on Nov. 17, about 400,000 PS3 consoles will be available. Meanwhile, the console?s European launch has been pushed back until March of 2007.

Crotty said the reduction in shipments was due to yield problems at Nichia Corp., which supplies blue laser diodes for the PlayStation 3's Blu-ray DVD. This slowed PlayStation 3 production.

Blues for Blu-Ray

Sony's Blu-Ray DVD read only optical device in the PlayStation 3 has dual purposes: up-converting the game console's output to high-definition resolution, and allowing viewers to watch high-definition movies using the console, according to Krishna Chander, senior analyst, storage devices, for iSuppli.

Sony's strategy was not lost on Microsoft, which plans to offer a separate add-on high-definition DVD system for the Xbox 360. This should be available around the holiday season this year. Nintendo has no plans to offer a next-generation DVD system in its game consoles.

Given that more studio movie releases now are supported by Blu-Ray disks, Sony?s PS3 has a slight advantage. However, Microsoft plans to offer some network television movies for download into the Xbox 360 system.

PlayStation?s HDD

The PlayStation 3?s HDD is a 2.5-inch, 20Gbyte capacity drive supplied by Seagate Technology Inc. The reason a HDD is included in the PlayStation 3 is to store the mathematical modeling based on physics for the motion and impact of the various game objects. The DVD media produces the objects that are manipulated by the game player and for each scenario; the most realistic situations are replicated using the Cell processor and mathematical models.

Not so expensive after all

While many fret over the high cost and price of the PlayStation 3 compared to the competition, iSuppli believes the console provides more processing power and capability than any consumer electronics device in history. Because of this, the PlayStation 3 is a great bargain, well worth its $599 price and $840.35 cost, iSuppli believes.
 
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